<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>May 13, 2009
</TR><!-- headline one : start --><TR>Investors hit by short-sale rule <!--10 min-->
</TR><!-- headline one : end --><TR>New SGX rules impose hefty fines on those who sell shares they don't own </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Goh Eng Yeow, Senior Correspondent
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Investors have been told by the Singapore Exchange (SGX) to pay fines of $1,000 or more within five days of failing to settle their trades. -- PHOTO: THE BUSINESS TIMES
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<!-- START OF : div id="storytext"-->SOME investors rushing back into the red-hot market have been caught out by new rules on short-selling and heavily fined for selling shares that they did not actually own.
They have been told by the Singapore Exchange (SGX) to pay fines of $1,000 or more within five days of failing to settle their trades.
The penalties were introduced last September to deter 'naked' short-selling during a period of near panic on global bourses.
Such short-selling occurs when a trader sells a stock he does not own or has not borrowed in the hope that the price will fall. This would allow him to pocket the difference.
But the SGX appears to be catching an increasing number of 'innocent' investors who fail to deliver small quantities of shares when a trade is due to be settled three days after it is transacted. The trades are usually 1,000 or 2,000 shares of a blue chip like DBS Bank or SingTel.
When investors fail to come up with the shares at settlement, the SGX has to buy the stock on a specially established buying-in market. It then delivers the shares to the buyer on the seller's behalf - as well as levies a hefty fine.
The number of failed trades has risen sharply in line with the rise in daily market volumes. They have more than doubled in the past month, from 1.4 billion shares to 3.7 billion.
Two weeks ago, the SGX buying-in market attracted trading in about 10 to 15 counters a day. By yesterday, the list of counters traded had grown to 50.
Many of these failed trades have apparently been made by retail investors returning to the market after a long absence. They are selling online shares held in Central Provident Fund (CPF) accounts without specifying that they are CPF trades, or their accounts were not properly linked up to the SGX.
One remisier gave the example of a client fined $1,000 after selling 1,000 OCBC shares online. Read the full story in Wednesday's edition of The Straits Times.
</TR><!-- headline one : start --><TR>Investors hit by short-sale rule <!--10 min-->
</TR><!-- headline one : end --><TR>New SGX rules impose hefty fines on those who sell shares they don't own </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Goh Eng Yeow, Senior Correspondent
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Investors have been told by the Singapore Exchange (SGX) to pay fines of $1,000 or more within five days of failing to settle their trades. -- PHOTO: THE BUSINESS TIMES
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"-->SOME investors rushing back into the red-hot market have been caught out by new rules on short-selling and heavily fined for selling shares that they did not actually own.
They have been told by the Singapore Exchange (SGX) to pay fines of $1,000 or more within five days of failing to settle their trades.
The penalties were introduced last September to deter 'naked' short-selling during a period of near panic on global bourses.
Such short-selling occurs when a trader sells a stock he does not own or has not borrowed in the hope that the price will fall. This would allow him to pocket the difference.
But the SGX appears to be catching an increasing number of 'innocent' investors who fail to deliver small quantities of shares when a trade is due to be settled three days after it is transacted. The trades are usually 1,000 or 2,000 shares of a blue chip like DBS Bank or SingTel.
When investors fail to come up with the shares at settlement, the SGX has to buy the stock on a specially established buying-in market. It then delivers the shares to the buyer on the seller's behalf - as well as levies a hefty fine.
The number of failed trades has risen sharply in line with the rise in daily market volumes. They have more than doubled in the past month, from 1.4 billion shares to 3.7 billion.
Two weeks ago, the SGX buying-in market attracted trading in about 10 to 15 counters a day. By yesterday, the list of counters traded had grown to 50.
Many of these failed trades have apparently been made by retail investors returning to the market after a long absence. They are selling online shares held in Central Provident Fund (CPF) accounts without specifying that they are CPF trades, or their accounts were not properly linked up to the SGX.
One remisier gave the example of a client fined $1,000 after selling 1,000 OCBC shares online. Read the full story in Wednesday's edition of The Straits Times.
